Inflation Persistence Network (IPN):
Main Fields of Study

Methodology.
Identification of appropriate definitions of inflation persistence, measurement issues associated with those definitions, the link between price rigidity and inflation persistence, and identification of the sources of persistence according to economic theory.

Analysis of individual price data.
The individual price records underlying the construction of both consumer and producer price indices have been made available in a large number of euro area countries, often covering a large fraction of the total databases constructed by the National Statistical Institutes. This has allowed the IPN to estimate probabilities of observing a price change across different economic sectors in micro price data, as well as studying price setting behaviour in the euro area.

Statistical Properties and Structural Models of Inflation Dynamics.
Work has been devoted to the estimation of measures of inflation persistence from univariate and multivariate econometric models. Study of main economic models of aggregate inflation dynamics and the implications for inflation persistence of alternative assumptions on: market structure, technology, indexation and heterogeneity across sectors.

Aggregation and Persistence.
Simple measures of the statistical properties of price time series at the sectoral and/or country level show that there is a lot of heterogeneity both in terms of volatility and of dynamical properties across time series. In the presence of common shocks the macro persistence is magnified in the aggregation process.

Inflation Expectations.
Analysis of the impact on the reduced-form behaviour of inflation of different assumptions regarding the way agents form their expectations.

Launching a survey on price behaviour.
The IPN has conducted surveys on price setting behaviour in nine countries of the euro area.

Inflation Persistence in Macro Models.
Analysis of the response of inflation in the euro area to five macroeconomic shocks through the use of results derived from Eurosystem large-scale macroeconomic models used in policy-making. The purpose has been to study to what extent inflation persistence is dependent on the different nature of shocks that affect inflation.